Options expiration and broader economic uncertainties challenge the stability of crypto ETFs

The recent swings in Bitcoin’s price have heightened the challenges for crypto-linked investment approaches, as exchange-traded funds (ETFs) that follow the asset have seen notable withdrawals while the market braces for a major options expiration. More than $22.6 billion in

and options are due to expire on September 26, marking a crucial point for price trends and market sentiment title1 [ 1 ]. This expiry, combined with ongoing global economic uncertainty, has increased the risks for ETFs, with some funds shifting from net inflows to outflows as both institutional and individual investors reconsider their positions title2 [ 2 ].

As of September 24, spot Bitcoin ETFs have attracted $241 million in net new investments, reflecting persistent institutional interest even as prices have fallen title1 [ 1 ]. In contrast, Ethereum ETFs have seen $79.4 million withdrawn during the same timeframe, highlighting weaker enthusiasm for the second-largest digital asset title1 [ 1 ]. This split points to a changing risk appetite, with Bitcoin showing some durability despite a generally negative market. Bitcoin has hovered near $111,000, a key support area, while Ethereum has slipped below $4,000, resulting in over $240 million in forced liquidations title2 [ 2 ].

Options trading data reveals a negative outlook, with put options outnumbering calls for both Bitcoin and Ethereum. For Bitcoin, the “max pain” price—where option holders face the greatest losses—is $110,000, just under the current market value title1 [ 1 ]. The put/call ratio for Bitcoin options is 0.76, suggesting more bets on price declines title1 [ 1 ]. For Ethereum, the max pain point is $3,800, and its put/call ratio is 0.8, further indicating trader caution title1 [ 1 ]. Open interest in Bitcoin futures remains close to all-time highs, but the gap between call and put contracts has narrowed, hinting at a possible move toward lower prices title2 [ 2 ].

Technical indicators show that Bitcoin’s recent upward momentum is fragile. Both the 5-day and 10-day moving averages are trending downward, and the price has fallen through important Fibonacci retracement levels title3 [ 3 ]. Experts warn that if Bitcoin drops below $111,000, it could quickly fall to $99,000, which would likely intensify ETF outflows and prompt more liquidations title3 [ 3 ]. Meanwhile, Ethereum’s negative trend is even more evident, as open interest in its futures contracts has dropped sharply with traders closing out long positions title1 [ 1 ].

Investors are also keeping an eye on broader economic factors, such as the Federal Reserve’s upcoming rate decision in October. According to the CME Group’s FedWatch tool, there is an 85.5% chance of a rate cut next month, which could temporarily boost riskier assets like Bitcoin title2 [ 2 ]. However, ongoing geopolitical issues and the possibility of a U.S. government shutdown have made investors more cautious, with Polymarket participants assigning a 77% probability to a shutdown by September 30 title1 [ 1 ]. These uncertainties make it harder for ETFs to attract new capital, as they depend on a stable economic backdrop.

While the long-term positive outlook for Bitcoin remains, short-term price swings are putting investment strategies to the test. Derivatives data points to three possible price ranges for Bitcoin: a bearish band between $107,000 and $110,000, a neutral range from $110,100 to $112,000, and a bullish zone between $112,100 and $115,000 title3 [ 3 ]. Institutional investors are still heavily involved in Bitcoin futures, but the tilt toward put options shows ongoing caution. For Ethereum, the negative sentiment is even stronger, with falling open interest and negative funding rates suggesting further downward pressure is likely title1 [ 1 ].

As the September options expiration approaches, ETF managers are facing a major challenge in navigating the current market volatility. The next few days will be crucial in determining whether Bitcoin can hold above important support levels or if bearish forces will lead to a deeper drop. For those investing in cryptocurrencies, the interaction between derivatives markets, economic developments, and ETF flows will be key to understanding where prices might head in the near future title1 [ 1 ].